Nigeria’s Decline To 4th Africa’s Largest Economy

Nigeria has slipped to fourth place among Africa’s largest economies, according to updated 2024 GDP figures released by the International Monetary Fund (IMF) and highlighted by Afreximbank Research. Once regarded as the continent’s economic powerhouse, Nigeria now trails behind South Africa, Egypt, and Algeria, underscoring the impact of prolonged macroeconomic instability.

South Africa reclaimed the top spot with a projected GDP of $400.19 billion, followed by Egypt at $383.11 billion and Algeria at $264.91 billion—buoyed by robust public investment and hydrocarbon revenues. Nigeria’s GDP now stands at $187.64 billion, a sharp decline driven by policy inconsistencies, currency devaluation, and weak reform execution.

“This shift underscores the deep-rooted macroeconomic imbalances Nigeria continues to grapple with,” Afreximbank said on its official X page. “Despite its vast population and resource base, Nigeria’s foreign exchange challenges and inflationary pressures have severely weakened its economic footing.”

Chief Executive of CFG Advisory, Tilewa Adebajo, echoed these concerns in the firm’s 2025 economic forecast, warning that Nigeria’s economic reforms have failed to deliver sustained growth. “The naira’s devaluation—from 450 to over 1,700 per dollar—has led to a loss of over $300 billion in economic value,” he said.

The IMF projects Nigeria’s growth to slow to 3.0 percent in 2025 and 2.7 percent in 2026 amid persistent stagflation and declining productivity. Fuel subsidy removals and interest rate hikes have compounded pressures on consumers and businesses, while social safety nets have proven inadequate.

Meanwhile, Nigeria’s debt burden continues to mount. Borrowing has surpassed $100 billion, and debt servicing costs are set to reach N16.3 trillion in the 2025 budget—outstripping combined spending on health, education, infrastructure, security, and defense.

Critics argue that instead of channeling subsidy savings into capital expenditure, the government has prioritized debt repayment. With money supply surging 50 percent year-on-year to ₦108 trillion, the Central Bank’s inflation control efforts have faltered, threatening further erosion of investor confidence.

As Africa’s economic landscape evolves, Nigeria’s position now reflects more than rankings—it signals the urgent need for coherent, credible reforms to avert deeper economic decline.